Top Spread Betting Companies in 2017

Spread betting has become extremely popular in the UK in the last few years. There are now more than 20 different spread betting companies offering their services online.

The following page provides information on the top brokers as regulated by the FCA in the UK. On this page you’ll also be able to compare the best spreads for different market and assets.

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How to Choose a Spread Betting Company

Choosing the correct spread betting company or broker is one of the most important and maybe overlooked things by beginners. Most of the beginner traders think that choosing your broker is about who has the best deals or who is offering the biggest spread betting bonuses or who offers short term incentives to try and entice me to increase my deposit, but this is wrong.

It´s important that you feel comfortable with the broker that is executing your trades. It´s also important that your funds are secure and segregated. On this page, we’ll go step by step on what to look for when choosing a spread betting company.

1. FCA regulation

The first and most important thing you need to look for is that the firm is regulated by the FCA. Up until 2013 the FSA (the Financial Services Authority), which was an independent body, regulated all financial services in the United Kingdom. In 2013 the FSA was divided in 2 organizations; the FCA (Financial Conduct Authority) and the PRA (Prudential Regulation Authority). The FCA regulates the financial services industry and the PRA is a part of the Bank of England that supervises banks, credit unions, insurers and major investment firms.

The FCA operates independently from the UK government and it´s financed by charging a fee to its members, which are all firms providing financial services (both retail and wholesale) to their customers.

Deciding to deposit and trade with a non-regulated spread betting company could have serious consequences. Just think about what non-regulated means – this firm would not have to be held accountable for any of its practices. More than that, this firm will certainly not be operating under the minimum restrictions of the British law. It will not have to open its books to anyone and will most certainly not be located in the UK.

Would you really want to deposit your hard earned money with such a shady firm? I think we all know the answer to that question. Having an FCA approval to operate in the United Kingdom´s financial market means that the firm is in compliance with all the British laws to operate and offer you its services. Most importantly, your funds will be segregated from the firm’s.

2. Segregated funds

This is the second thing you need to look for when choosing a spread betting company; your funds have to be segregated from the firm’s. A spread betting broker needs capital to operate on a daily basis (salaries, rent, taxes, etc…) therefore it has an allocated budget on the firm´s bank account.

The firm makes money charging us a spread when placing a bet and this fee also goes into the firm´s bank account. The money that the spread bettors deposit in order to trade is not the firm´s to use to operate, it has to be segregated in a different account because it´s the clients’ money.

Here´s where it can all go down. Let´s imagine you deposit your money with a firm that doesn´t segregate funds and uses its clients’ money to cover some of their expenses. You won’t see the difference because you will always have the equity you deposited in your trading platform balance. But let´s say you want to make a withdrawal and the firm uses other clients’ funds to process it. Now let´s imagine that 100 more clients want to withdrawal their funds but there´s no new clients funds to use to process it? This is unsustainable and illegal and the firm will most certainly bankrupt with your funds trapped in a criminal investigation.

This is the worst case scenario, but you need to protect yourself and always ask if the firm segregates their funds.

Last but not least, a world presence is always a right way to go.

3. World presence and history

Experienced traders will always look for size, history and world presence when choosing their spread betting companies. Do your due diligence and research what firms have been servicing their clients for more than 2 decades with customers in over 50 countries and which ones just popped up into the scene. IG Index for example is one of the most trusted firms since it has been operating since 1974.

Choose wisely and account for everything because if you are really serious about becoming a professional spread bettor you will be depositing thousands, or even hundreds of thousands of dollars, with your firm so it´s very important to choose a reliable one.

Now that we know what to look for on the legal side of things with a spread betting firm, it’s time we focus on the advantages offered by the broker to its clients.

4. Spread size

We all know that whenever we make a spread bet we pay a commission to our broker. These commissions directly affect our profits or losses for the trade and the overall profits and losses of our trading activity. The commission we pay to our broker for the service of getting our trades executes in the markets is called the spread.

The wider the spread, the bigger the commissions we pay. We need to understand that the more illiquid the markets we are trading, the wider the spread is, this is why when we are comparing spreads between firms we might want to focus on the very liquid currency pairs like the EUR/USD, the GBP/USD and the USD/JPY.

A good spread on the EUR/USD would be below 1 point in very liquid hours and around 1 point in between trading sessions. There´s some brokers that decide to charge a fixed 1 point spread on the EUR/USD regardless of the time, so it´s up to you to decide if you want to choose a fixed or variable spread to trade with.

In any case, the lower the spread, the bigger your profits will be in the long run. Just imagine you open a long spread bet on the EUR/USD with 2 firms, one that has a spread of 0.7 points and another one with a spread of 2.5 points. Let´s say your targets are 10 points away and are hit in both trades. With the first broker you would make a net profit of 9.3 points and with the second one you would make a net profit of 7.5 points. The difference is huge; now multiply this over 100 trades… The math speaks for itself. Always go with low spreads when choosing your broker.

After you choose to lower your trading costs, i.e. commissions, you need to look for something that fits your risk management rules.

5. Limited risk accounts

This is rather important; limited risk accounts are a good way to manage your spread betting risk. If you are a beginner at spread betting you would want to look for a broker that has this insurance for its clients.

What a limited risk account offers is a guaranteed stop-loss order with every trade you make. This means that you don´t have to worry about your stop orders not being filled because of high volatility, if you are wrong your spread bet will always close at the pre-determined price.

Another feature of this type of account is a guarantee that you can´t lose more money than your account balance. This means that you’re protected from incurring more losses beyond your equity so you don´t have to worry about margin calls..

There is of course a fee you would pay in order to trade with a limited risk account and that is the premium of guaranteed stop losses.

If you’re a beginner, you should probably look for spread betting companies that offer these types of accounts, but if you are a seasoned spread bettor and you feel comfortable with your system then you can bypass this.

We have gone through a lot and now we are ready to fund our account but not every trader has the same account size and some firms don´t offer micro accounts and small bet sizes.

6. Minimum account and bet size

If you’re a professional spread bettor you probably won’t be too concerned about the minimum requirements that each broker has regarding deposits and bet sizes. But if you’re just starting out or are a recreational trader trying to make it to part-time trading then this should be quite important for you.

There is an industry standard between firms of a £100 minimum deposit and a minimum bet of £1 but you will also find firms that have minimum of £5. In any case, all regulated spread betting brokers have minimum requirements that meet the needs of both professional and non-professional spread bettors.

After we have found a firm that meets both the legal and our financial requirements, we have to look for the best trading platforms available.

7. Trading platform

Having a great broker that executes your trade at the price you want them to be executed is great but we also have to analyze price in order to have a clear idea the price level we want to open our spread bets at.

The things you need to look are:

Does the trading platform offers charting software?

Does the charting software offer all the indicators your need?

Is the charting platform user friendly or does it lag?

Do you have access to all the orders to place your trades:

Stop loss orders (both guaranteed, non-guaranteed and trailing stops)

Limit orders

Market orders

OCO orders (one cancels the other)

When looking for the correct trading platform to fit your needs you need to go through your trading system and how you analyze the markets. Remember that not every trader will use the same set of indicators or orders to place their trades. This is why some platforms will fit some traders and some won´t.

As you can see, choosing the correct spread betting firm is something that should not be taken lightly and can be a long process if you want to be thorough. But bear in mind that you will only go through this process once and afterwards you’ll be able to trade with the same firm for years.

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